Greek bailout deal hangs in the balance

Euro zone ministers want Athens to enact key reforms by Wednesday

BRUSSELS • A bailout deal for Greece was on a knife-edge yesterday as leaders of the 19 euro zone member countries gathered in Brussels to discuss how to keep the embattled economy within the single currency.

Greece has been told it needs to restore trust by enacting key reforms before talks can open on a new financial rescue to keep it in the single-currency area.

There had been optimism going into the weekend that Greece would secure a third bailout deal after Prime Minister Alexis Tsipras managed to push through Parliament many of the reforms and proposals that it had earlier resisted.

But months of fractious talks and Mr Tsipras' decision to hold a snap referendum on the bailout terms on July 5 have done their damage. Lawmakers remain sceptical over whether Athens will carry out reforms the Greeks had overwhelmingly rejected in the referendum.

The meeting of euro zone finance ministers on Saturday was meant to pave the way for a final decision on whether Greece should qualify for a new aid package ahead of a summit of European Union heads of state and government.

The meetings have been widely seen as "the last try" for Greece to avert bankruptcy and exit from the euro zone, or "Grexit".

But following an acrimonious meeting that had been adjourned on Saturday at midnight, there was little surprise when European Council president Donald Tusk announced that he had called off the EU meeting "until we conclude talks on Greece".

What the ministers had agreed in principle on Saturday was to seek ways to ease Greece's debt burden by extending loan maturities and other steps stopping short of a writedown, but only if Athens first implements key reforms of taxation, pensions, labour markets and public administration.

According to the Finnish Finance Minister Alexander Stubb yesterday, Greece has until Wednesday to enact new laws.

Describing a joint proposal the finance ministers were putting to the leaders at the summit, Mr Stubb told reporters: "No. 1, it needs to implement laws by July 15. No. 2, tough conditions on, for instance, labour reforms and pensions and VAT and taxes. And then No. 3, quite tough measures also on, for instance, privatisation and privatisation funds."

Arriving at the summit yesterday, German Chancellor Angela Merkel said that a Greek bailout deal will not come "at any price", warning of tough negotiations.

Mr Tsipras said he was looking for an "honest compromise". "We can reach an agreement tonight if all parties want it," he said.

Without a debt deal soon, Greece faces financial collapse - banks are running out of cash while its economy is suffering from capital controls. Global stock markets have been jittery as the Greek debt crisis has weighed on sentiment and investors worry about the ramifications for the world economy should Greece leave the euro zone.

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